How to Determine Price Sensitivity? Analysis

Price Setting (Pricing)
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Parag Utekar
Student (MBA), India
The marketing mix, commonly referred to as the 4Ps (Product, Promotion, Place, and Price), helps capture the value for a firm's chosen customer segments. The first three variables of the marketing mix represent the cost to the firm. The role of pricing is to tap into the value created and generate revenues. If the price setting or pricing is done right, then the revenues will help fund the firm's cost and enable current and future value-creating activities like research and development, and generate a profit. One key element in determining the price is "Price Sensitivity" (PRS), and that sensitivity varies across customers, time and products. PRS analysis seems pretty intuitive. But firms need a structured approach which can help judge the PRS. There are at least 3 major factors or elements that influence / determine price sensitivity: THE MAGNITUDE OF THE PRICE: The PRS is greater for high-cost categories than for low-cost categories. For example, a 10% price differential on a (...) Read more? Sign up for free

  Parag Utekar
Student (MBA), India
 

Zones or Levels of Of Price Elasticity

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